The News Industry Could Learn a Thing or Two from Netflix

A bundling service may be the only way to save this industry

The alignment — reach as many [readers and potential customers] as possible — was obvious, and profitable for the publishers in particular.

— Ben Thompson, Stratechery

However, even though the Internet has given publishers theoretical access to all the millions of eyeballs on the Internet, it has also set their readers loose. Companies like Google and Facebook can give advertisers something even more valuable than a big audience — a specific one.

Adapting for Survival

Insofar, the two most common changes adopted by publishers to address declining readership and profitability are setting up paywalls and joining aggregator platforms.

Paywalls, Subscriptions and Membership Models

A 2016 survey by the American Press Institute indicates that paywalls have become the norm. Of the 98 US newspapers with circulation above 50,000, 77 use some type of online subscription model. 80% of these paywalls are metered, “soft” paywalls which limit the number of free articles a reader can access before being asked to pay for a subscription.

Source: AdWeek

Joining an Aggregator Platform

Digital native publishers have grown by piggybacking on the growth of Internet companies. The Internet has made information cheap, with current events and reporting available from hundreds of different sources. Today, the real value seems to be captured in distribution, a role performed by aggregator platforms.

The big question with Facebook is most of Facebook’s revenue is in News Feed, and that’s where they’ve not shared revenue.

Jonah Peretti, Buzzfeed Founder and CEO

Similar complaints plague Apple News. According to Slate Magazine, the revenue they make from 50,000 page views on their own site is equivalent to 6 million views on Apple News. Apple News is now trying to sign publishers up to their news subscription service where Apple will take an incredible 50% cut from subscription fees and split the remaining half amongst the publications users read.

So Which Way Forward?

For most publications, paywalls and aggregator platforms are at best, temporary solutions. The long-term sustainability of any initiative should be evaluated by the behaviour they incentivize.

“Newspapers are equal parts business enterprises and civic institutions.”

— Penelope Muse Abernathy, The Rise of a New Media Baron and the Emerging Threat of News Deserts

Free press has a responsibility to act in the public interest and hold institutions accountable. In general, good content of any kind should be produced in the interest of its audience. This is at odds with what advertisers want as they increasingly look towards optimizing their ad spend by improving conversion rate metrics or reaching more eyeballs.

Photo by Mike Ackerman on Unsplash

An Aggregator Product from Within

Services like Netflix and Spotify have paved the way for a solution that can help the news industry reconcile these differences by involving readers directly in financially supporting the press.

Illustration by Lukas Kouwets, Momkai

Cliché but true: if the news industry wants to avoid being disrupted, it must take a risk and disrupt itself.

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